Medical Australia Ltd on track to deliver profitable growth this year

Medical Australia Ltd has reported revenue of $8.8 million, up 20% on the previous year and a $1 million improvement in earnings on the previous year.

The loss of $343,000 was due to abnormal one-off items including costs of litigation and proposed transaction relating to the Care Essentials .

Earnings before interest tax and depreciation (EBITDA was a loss of $104,000. The 20% lift in revenue mainly came from new supply agreements and a minor contribution from new Original Equipment Manufacturing (OEM) agreements.

MLA’s chief executive officer Mark Donnison commented, “This has been a year of significant progress for MLA. We have strengthened our balance sheet, expanded our operations into new international markets, established a successful and growing OEM business, and secured new supply agreements with blue chip healthcare groups."

MLA made significant operational progress during the year. Through continued investment in its product supply chain, MLA secured OEM agreements with three leading healthcare companies:

- MediVet
- Terumo Medical Corp and
- Fresenius Kabi.

OEM operations were a new initiative for MLA in FY2011 and offer significant future revenue and profit upside.

As well, MLA secured an agreement to distribute product for international healthcare company Haemonetics.

MLA was also successful in securing new supply agreements on commercially sensible terms with new customers in Australia and new international markets. Some highlights include a contract to supply needle cutters to UNICEF, which gives the company exposure in a number of large international healthcare markets, and a contract to supply IV consumable products to 100 Healthscope hospitals and medical centres.

MLA also secured a number of smaller supply agreements and tender re-competes which have strengthened its market presence.

Donnison said, “At the beginning of the year our cash position was a bank overdraft of $176,000 and we are entering FY2012 with $828,000 in the bank, excluding the receipts from options of approximately $678,000 post 30 June, and a fast growing revenue base.

“While the profit performance is somewhat disappointing due to some abnormal one-off items, we are confident that MLA is entering a period of sustainable profitability. Regardless, in 2011 our real achievement was putting in place a framework and foundation that will reposition MLA for solid future growth."

Outlook is good

“MLA has commenced 2012 in a strong position. The company now has the necessary financial flexibility to ramp up new supply contracts and expand its OEM activities. While revenue from OEM agreements has been slower to ramp up than first anticipated, we are confident that they will be a larger revenue and earnings driver this year.

“Our focus on cost management is ongoing, and we remain vigilant in managing overheads. Capital expenditure remains low but is well balanced with continued investment in product development and enhancement.

“As announced in July, MLA was appointed Master Distributor for MediVet’s stem cell regenerative medicine in the United Kingdom, and already this is showing very promising signs of growth with encouraging levels of inquiry from veterinary practices and equine centres throughout the UK. We believe this will be a major growth platform for MLA in the UK.

“We also have a very active pipeline of tendering opportunities in Australia, and in new overseas markets through our distributor network, and we expect to announce new supply agreements shortly. As such, we firmly believe that MLA is still in the very early stages of its growth.

“In FY2012 MLA will continue to build revenue and earnings by pursuing organic growth opportunities. We also remain focused on securing distribution and supply agreements on terms that are commercially acceptable for MLA, our partners and our customers.

“With an expanding international footprint and growing recognition in human and animal healthcare markets, MLA is in the strongest position in its history to deliver profitable growth this year.”

Originally published at: http://www.proactiveinvestors.com.au/companies/news/18833/medical-australia-ltd-on-track-to-deliver-profitable-growth-this-year-18833.html